2004 Crown Investments Corporation of Saskatchewan Annual Report

Notes to Consolidated Financial StatementsDecember 31, 20046. Long-Term Investments (continued)All unpaid principal and interest is due on December 15, 2017. On that date, any amounts outstandingwill convert to 100 per cent of HARO equity shares. The Corporation has a unilateral right, prior toDecember 15, 2017, to convert no less than 25 per cent of the loan to either HARO non-voting, HAROvoting or Crown Life shares. Any conversion may be subject to regulatory approval.Ownership of the 68,000,000 of HARO’s Class B non-voting common shares entitles the Corporation toa maximum of 100 per cent of participation rights with respect to dividends and remaining property ofHARO on its liquidation or dissolution. Subject to regulatory approval, the Corporation has a unilateralright to exchange at any time the Class B shares for voting shares or HARO’s assets.g) The Corporation owns a 50 per cent joint venture interest in Meadow Lake Pulp Limited Partnership(MLPLP) located near Meadow Lake, Saskatchewan.The Corporation has provided the following loans:i) Participating Debenture ($79.5 million) bearing interest at a fixed rate of 11.15 per cent, calculatedon October 31 each year. Due to uncertainty of cash flows, an allowance for investment lossesof $79.5 million (2003 - $60.0 million) related to the Participating Debenture has been recordedresulting in a net balance of $Nil (2003 - $19.5 million).ii)Term Loan ($10.0 million) bearing interest at prime plus 2 per cent, or 6.25 per cent atDecember 31, 2004 (2003 - 6.5 per cent). Any interest not paid on October 31 of each year is addedto the principal balance.iii) Contingency Loan ($5.5 million) bearing interest at prime plus 1 per cent, or 5.25 per cent atDecember 31, 2004 (2003 - 5.5 per cent). Any interest not paid on October 31 of each year is addedto the principal balance. Due to uncertainty of cash flows, an allowance for investment losses of$5.5 million (2003 - $Nil) related to the Contingency Loan has been recorded resulting in a netbalance of $Nil (2003 - $5.5 million).iv) Guarantee Advance ($4.0 million) bearing interest at prime plus 1 per cent, or 5.25 per cent atDecember 31, 2004 (2003 - 5.5 per cent). Any interest not paid on October 31 of each year is addedto the principal balance.v) Cash Flow Loan ($5.2 million) bearing interest at prime plus 1 per cent, or 5.25 per cent atDecember 31, 2004 (2003 - 5.5 per cent). Any interest not paid on October 31 of each year is addedto the principal balance.vi)Guarantee Loan ($5.0 million) bearing interest at prime plus 1 per cent, or 5.25 per cent atDecember 31, 2004 (2003 - 5.5 per cent). Any interest not paid on October 31 of each year is addedto the principal balance. Due to uncertainty of cash flows, an allowance for investment losses of$5.0 million (2003 - $Nil) related to the Guarantee Loan has been recorded resulting in a net balanceof $Nil (2003 - $5.0 million).76